Are heat pumps getting hotter? The knock on heat pumps, at least historically, had been that they could not cope in very cold weather. But when paired with a fuel oil backup, oil dealers said, they can be efficient and give customers a measure of added control over their energy choices and their energy costs.
One of the attractions for fuel oil dealers is that technicians trained in air conditioning find that working with heat pumps is very similar. A heat pump, in the most basic terms, is an air conditioner that can heat and cool. It does this by extracting heat found in the air and transferring it inside.
The heating and cooling functions of a heat pump have separate efficiency measures. Cooling efficiency is measured by “Seasonal Energy Efficiency Rating,” or SEER. Heating efficiency is measured by “Heating Seasonal Performance Factor,” or HSPF.
In warm climates where the goal is to generate cool air more often, a heat pump with a high SEER is preferable. In cooler climates, where the need for warm air is greater, a heat pump with a high HSPF may be preferable. Some fuel oil dealers have found that by venturing into installing heat pumps they have added a healthy, and profitable, revenue stream. But there are many factors to consider. Three dealers discussed them recently with Fuel Oil News. Here’s what they had to say.
Besche Oil Company
Besche Oil Co.’s history with heat pumps goes back to the early 1990s, said John Hartline, senior vice president, and all that experience has paid off.
There is much that is similar in working on heat pumps and on air conditioning, Hartline said. “You’re putting in basically the same kind of unit with a fossil fuel kit, and over the years we’ve become very experienced at understanding the electronics that you have to do to make that happen,” he said. “It didn’t happen overnight. We kind of fumbled around in the nineties, but it’s really become our bread and butter since about 2005.”
The company is headquartered in Waldorf, Md., south of Washington, D.C. The area is “on the edge” of where the heat pumps of the early 1990s could operate effectively, Hartline said. “Go farther south, and there are a lot of heat pumps,” he said. “Go north of Baltimore and there are a lot fewer heat pumps.”
Today that is changing somewhat, Hartline said, as manufacturers have recognized the value of “dual fuel” systems. Besche Oil Co. is a dealer of Carrier and Trane equipment, which includes heat pumps. Such manufacturers making systems available that use the heat pump in the spring and the fall when it’s most effective, while employing oil, propane or natural gas, “as a fossil fuel backup during the peak part of the winter,” Hartline said. “I think that’s making the [effective] range of the heat pumps go farther up the East Coast,” Hartline said.
Federal government rebates based on energy efficiency are influencing the market, too, Hartline observed, but not necessarily in fuel oil’s favor.
The federal rebates are primarily available only on gas or electrical equipment, Hartline said, making it more difficult to win new customers for fuel oil among those opting for heat pumps.
“We used to convert maybe 40 to 50 people a year from electric backup to oil backup,” he said, “but since the government rebates have come in – and since the last big price run-up two years ago – that’s pretty much down to zero.”
While that is not good for recruiting new customers to fuel oil, it can help to persuade existing fuel oil customers interested in heat pumps to stick with fuel oil – especially, Hartline said, “If you’re positioned in the marketplace as knowing heat pumps.”
Using Yellow Page and Internet ads, among other means, Besche Oil has raised its profile as a heat pump installer, Hartline said. “When people think of heat pumps, normally they wouldn’t think of an oil company, but we’ve been pushing it pretty heavily for almost ten years now.” As a result, Besche Oil’s customers who are considering switching to a heat pump typically call the fuel oil dealer, Hartline said.
“We show them the advantages of keeping oil as a backup,” Hartline said, the top one being, “It’s a lot warmer in the winter time.
“It’s much more comfortable during the coldest part of the winter to have oil as the backup heat or the primary heat as opposed to electric,” Hartline said. Further, electric rates for some customers soared as much as 45 percent a couple of years ago, he said, making fuel oil somewhat more competitive.
With a dual fuel system, Hartline said, customers have options: When the price of fuel oil is low, they can make it the primary heating source by flipping the thermostat to the “emergency heat” setting; and when the price of fuel oil is high, they can use electricity. “It gives the consumer some control over whether to use electric or oil as the primary heat source,” Hartline said. “The tough part for us is it drives the degree day system crazy.”
Chester County Fuel Oil Inc.
Rick Scheibe Jr., had a heat pump installed in his house this summer. That in itself isn’t unusual in the area of Pennsylvania where he resides, but it just so happens that Scheibe works in the family business, Chester County Fuel Oil, and so he had a dual perspective on the process: that of installer and customer.
Heat pumps are suitable and popular in the area.
“When it’s 50 degrees outside, they keep your house warm,” Scheibe said. “They work perfectly.”
But they are not enough to warm a house during “those real super-cold snaps,” Scheibe said. Last winter, for example, there were weeks when the temperature stayed below 30 degrees, and some nights of single-digit temperatures. In those conditions, Scheibe said, “A heat pump’s running its tail off.” He told of a friend who had to resort to space heaters to warm his house “because the electric coil just can’t do it” in those temperatures.
(When the temperature drops to 20 degrees Fahrenheit, for example, a heat pump will collect ice on its outside coils, requiring that it switch periodically to air conditioning mode to heat the coils and melt the ice.)
Chester County Fuel Oil installs hybrid systems – a heat pump with a fuel oil or natural gas backup – and those give “the best bang for the buck,” in terms of efficiency and compatibility, Scheibe said. A hurdle for some customers is the cost.
“If someone has a heat pump in their house and they’re looking to upgrade, there is a lot of sticker shock,” Scheibe said. “They are expensive to buy.”
To qualify for a federal tax credit the equipment must meet an energy efficiency standard that adds to the initial outlay, Scheibe pointed out, because the higher-efficiency equipment carries a higher price tag: “Replacing an existing unit could easily cost $12,000 – for a higher-end system.”
On the June day that he spoke with Fuel Oil News, Scheibe said he had met with a sales representative for Bryant Heating and Cooling, which manufactures heat pumps, to order a heat pump for a house he had recently purchased. Scheibe said he had opted for a pump with the second-highest efficiency rating, a move that would save him some $900 off the cost of the heat pump, which he was planning to install himself.
Much of Chester County Fuel Oil’s ongoing business in heat pumps is with customers who have had a heat pump for years, but now want to upgrade to new, more efficient models, Scheibe said.
Wear and tear on the outside unit is the primary reason customers decide to upgrade, he said. “If you have a 15-year-old unit outside, it’s noisier. Your neighbors are hearing it. It’s just not as efficient.”
Today’s highest-end heat pumps are technologically advanced, Scheibe said. “They have fault codes to tell you what’s wrong. But the older stuff, you have to know what you’re doing. You might have eight, ten thermostat wires in there and you have to know what all the wires control.” Experienced service technicians are needed to deal with that older equipment. Chester County Fuel Oil has one in Scheibe’s father, who has some 25 years’ experience with heat pumps and air conditioning systems, the younger Scheibe said.
“It’s a good extension of our fuel oil business,” Scheibe said of heat pump installations and service. “If someone’s replacing their air conditioning we try to up-sell the heat pump. We tell them it helps knock the edge off their heating bill.”
Scheibe said that the heat pump for his house was to replace the original air conditioner.
“I’m getting a high-end heat pump and I’m getting some bells and whistles on it too,” he said. He said his “dealer cost” was going to be approximately $8,000. “That’s my cost with no markup,” he said. “I’m not marking up the parts and I’m going to put it in myself.”
But rebates, lower operating cost and tax credits help to lessen the sticker shock, Scheibe said. “There are a lot of tools out there to help you sell it,” he said.
For example, the Philadelphia Electric Co., the utility that is known as PECO, offers rebates to customers who install heat pumps that are energy efficient. “If you get a high-end heat pump, they’ll give you $400,” Scheibe said.
The utility company’s Web site (Peco.com) features a calculator. Customers can enter information such as the square footage of their house, the SEER rating of their existing and contemplated heat pumps, and get an estimate of the savings they would realize on their electricity bill.
“It shows how you can save money hand over fist by upgrading,” Scheibe said. “That’s a sales tool.”
The size of his house is 3,000 square feet. According to the calculator on the utility company Web site, he said, upgrading to a heat pump with a 17 SEER should save him about $1,400 annually on his electricity bill.
Leonard-Splaine Co. Inc.
A heat pump with an oil backup is “a wonderful way to heat a home,” Steve Thompson, chief operating officer of fuel oil dealer Leonard-Splaine Co., The company is based in Woodbridge, Va., where the climate is ideal for such systems, Thompson said.
“Dual fuel systems” – a heat pump paired with fuel oil or natural gas backup – have grown in popularity over the past three to five years, Thompson said, “because of the cost of energy, and the need to conserve energy and look for alternative, better ways to heat.”
The heat pump by itself, regulated by an outdoor thermostat, can in some cases be enough to adequately heat a house, Thompson said. When the temperature falls below a certain point – that can be determined by the customer – the oil backup can then take over and heat the house with or without the heat pump, he added. “We find them to be very efficient in this area because they allow you to take advantage of all the temperature extremes. It’s something that we recommend, and the cost is not as much as people think,” he said, especially if they were already intending to buy an air conditioner with an oil furnace.
“In many cases for an extra $800 to $1,200 they can have this dual fuel system,” Thompson said. “We have customers that regulate the outdoor thermostat to take advantage of lower energy prices, whether the energy is fuel oil or electricity,” he added.
“It makes more sense to do it in an area like ours where the climate is a little warmer.” Virginia and Maryland are probably “ideal states” for such systems, but with the development of new, more energy-efficient heat pumps, the equipment could become a viable option for consumers farther north, Thompson suggested.
A stigma that once carried over from the old days was that a heat pump “blows cold air,” Thompson said, but manufacturers have made improvements in the equipment over the years. In tandem with an electric resistance coil, fuel oil or natural gas, today’s heat pumps work efficiently, he said, though a system with a resistance coil carries a hefty price tag.
“The climate is really what’s critical to all this,” Thompson emphasized. “Paired with oil, a heat pump is an excellent option.”